The main role of credit reference agencies (CRAs) in the UK is to collect and disseminate information on people’s credit history as well as their creditworthiness. The three main agencies are Experian, Equifax and TransUnion. If you have ever requested a credit report or checked your credit score, you have probably used at least one of them.
Some of the information that you may find on your credit report includes:
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- Details of your current and past lending (mortgages, personal and business loans, credit cards and store cards) and how you’ve kept up with payments.
- Inquiries (details of those who have looked at your credit history over the last few years or who have asked about your creditworthiness).
- Personal identifiable information (your current name, names used in the past, current and past addresses and whether you are on the electoral roll).
- Public record information (bankruptcies, house repossessions, county court judgments (CCJs) or individual voluntary arrangements (IVAs)).
- Details of any financial associations you have with another person, such as a joint mortgage.
Your credit report does not include information about current accounts or savings accounts, salary, criminal record, student loans, medical history, council tax arrears or information regarding religion, race and sexuality.
Most of the adverse information on your credit report, like missed or late repayments, stays there for a minimum of 6 years. Other information, such as searches on your report, is expunged sooner.
But what sources do the CRAs get your information from and why might those sources share it?
The majority of the information credit agencies use to create your credit report comes from creditors, such as credit card companies, banks, mortgage companies and credit unions, who provide CRAs with regular reports on your current credit status.
There is no law that requires creditors to forward your information to CRAs. They do it simply because it’s in their best interests. The creditors’ ultimate aim is to gauge your creditworthiness through the credit score calculated by the CRAs from the information supplied. That’s why they give your credit information to CRAs on a regular basis.
Other parties, such as insurance companies, professionals (such as accountants and lawyers), local retailers and utility companies provide CRAs with your credit information only when you default in clearing your debts with them or when some adverse action is taken against you. A perfect example of an adverse action is the passing of your account details to a debt collection agency.
Debt Collection Agencies
Speaking of debt collection agencies, these can be another source of information for CRAs. For example, if you have an overdue debt with a medical or a utility provider, they may sell your debt to a debt collection agency. The agency may then report the account to CRAs as a way of increasing the pressure on you to clear the debt.
Information related to bankruptcies, CCJs and IVAs can easily be found in public records.
To obtain this kind of information, CRAs will scour public records themselves (by having their agents visit or request documents from public courts and government offices). Alternatively, they may purchase information from smaller companies that are in the business of similarly scouring records from courts and government offices and then selling it.
You can also unknowingly be a source of information to CRAs. When you make a credit application and you provide personal information such as your name, your current address, your employment history and so on, it is highly likely that this information will end up in at least one of the major CRAs’ databases. For example, a credit company that you applied to might forward your details to a CRA when requesting your credit report to determine your creditworthiness. If the agency doesn’t already have your information, it might use the details received from the credit card company to create a new file for you in its database.
The databases of CRAs contain a lot of information related to your credit history and creditworthiness. This information comes from many sources, including creditors and public records. You may also inadvertently provide information to these agencies when making credit applications.
However, it is important to note that CRAs having your information is not necessarily a bad thing. If you have managed your credit accounts well over time, this information can be extremely useful when you are making a new credit application, such as for a new credit card. The information collected by a credit reference agency and then purchased or obtained by the credit card company might help you get approved for a new card more quickly and easily.